Tudor, Kepos Hedge Funds Rise in 2014 as Paulson DropsKelly Bit and Katherine Burton
Pine River Capital Management’s Dan Li was up 14 percent last year through November betting on China’s ability to bring more investors into its stock market. He more than doubled that gain in December, returning 30 percent for the year as Shanghai equities surged.
Li wasn’t the only hedge fund manager ending 2014 on a high. Mark Carhart’s $2 billion Kepos Capital rose 7.8 percent in the final month to finish 2014 up 22 percent and Pierre Andurand’s energy hedge fund rocketed 15 percent in December after climbing 18 percent the prior month, according to people with knowledge of the returns.
The final two months of 2014 made the year for some managers who were able to navigate plunging oil prices, surging stock-market volatility and a rising dollar, catapulting these firms to returns of 20 percent or more. In the case of billionaire Paul Tudor Jones, his year-end trading saved him from marring a record of only one losing year since 1986 in his largest fund. For billionaire John Paulson, it just made a bad year worse.
The strong performance for some came as hedge funds, on average, barely made money, climbing 1.4 percent for the year, according to data compiled by Bloomberg.
Like other funds that use computer models to make trading decisions, Carhart’s Kepos Alpha Fund caught the big market moves in the last two months of the year, said a person with knowledge of the firm, who asked not to be identified because the information is private. Carhart started New York-based Kepos, named for the philosopher Epicurus’s school in ancient Greece, in 2010 after he was co-chief investment officer of the quantitative investment strategies group at Goldman Sachs Asset Management.
On average, so-called quant funds rose 20 percent last year, according to the Newedge Trend Index. Jim Simons’s Renaissance Technologies, one of the biggest quantitative firms with $26 billion under management, posted a 1 percent gain in December in its Institutional Equities Fund, extending its advance for the year to 15 percent, the person said.
Macro funds, which as a group struggled throughout most of the year, benefited from increased price gyrations in November and December. Oil prices fell by a third in the two months, ending the year around $50 a barrel, and stock volatility, as measured by the VIX index, rose as high as 24 in December, compared with 14 on average for the year. The dollar climbed against the euro and the yen as the U.S. economy strengthened and the Federal Reserve indicated it may raise interest rates this year.
Jones’s $13 billion hedge fund firm Tudor Investment Corp. completed the year up 3.2 percent, reversing a 0.5 percent loss through October, according to a person with knowledge of the returns.
Louis Bacon’s $15 billion Moore Capital Management finished 2014 up 1.7 percent through Dec. 24 in its Global Investments fund, recovering from a 1.2 percent decline in the first 10 months, said another person. Discovery Capital Management’s Robert Citrone ended 2014 down 3.2 percent, paring a 17 percent loss through mid-October.
Multistrategy firms such as Pine River, Eton Park Capital Management and Balyasny Asset Management were able to make money across asset classes.
Li’s Pine River China Fund, which trades stocks, convertible bonds and credit, posted a 30 percent gain in 2014, according to a person with knowledge of the returns. The fund was helped largely by the linkage of the Shanghai and Hong Kong stock exchanges, which for the first time allowed international investors to buy Shanghai-listed equities without a qualified foreign institutional investor quota, causing a rally in shares in November and December.
Eric Mindich’s $9 billion Eton Park also profited from its main fund’s China-related holdings in December, when it gained 1.1 percent, said a person familiar with the matter. The fund rose 6.4 percent in 2014.
Balyasny, the $7.4 billion Chicago-based firm run by Dmitry Balyasny, navigated energy trading in its specialized Zie fund, which jumped 6.4 percent in December and 19 percent last year, according to a person familiar with the returns. The firm’s Atlas Global and Atlas Enhanced funds, which trade more broadly, climbed 7.2 percent and 14 percent in 2014.
For John Paulson’s Paulson & Co., 2014 couldn’t end soon enough. Paulson suffered his second-worst year ever, as his event-driven and credit funds -- which account for $7.8 billion of his $19 billion in assets -- plummeted. His Advantage Plus fund, once the firm’s flagship strategy, fell 36 percent. In 2011, that fund, which bets on corporate events like bankruptcies and mergers and uses borrowed money to amplify returns, was down 51 percent.
Officials for the firms declined to comment on the returns.